White House in Favor of Change to Tax-Reporting Provision in Reform Law
On Monday, HHS Secretary Kathleen Sebelius and Treasury Secretary Timothy Geithner sent a letter to Senate leaders urging lawmakers to support an amendment that would alter a provision in the federal health reform law mandating additional tax-reporting requirements for small businesses, Politico reports.
The letter -- sent to Majority Leader Harry Reid (D-Nev.) and Minority Leader Mitch McConnell (R-Ky.) -- marks the first time the Obama administration has sought to make changes to the overhaul since it was passed in March (Haberkorn, Politico, 9/13).
The provision, which will take effect in 2012, requires businesses, not-for-profit groups and government offices to file 1099 forms with the Internal Revenue Service when they purchase $600 or more in goods or services from another business in a given year. Many business groups are opposed to the requirement because they believe that it would add more burdensome reporting requirements to business practices at companies that already are struggling.
Sen. Mike Johanns (R-Neb.) has sponsored an amendment (S 3578) to repeal the entire requirement. Sebelius and Geithner are urging lawmakers to support a different amendment, sponsored by Sen. Bill Nelson (D-Fla.), that would raise the reporting threshold to $5,000 and exempt businesses with fewer than 25 employees (Levey, Los Angeles Times, 9/14).
According to Politico, the letter was carefully worded to exclude the word "repeal." The provision is expected to generate more than $17 billion in revenue over 10 years.
Sebelius and Geithner wrote, "We are committed to reducing the gap between taxes legally owed and taxes paid," adding, "However, the administration believes the burden created on businesses by the new reporting requirement on purchases of goods that exceed $600 ... is too great" (Politico, 9/13).
Prospects for Amendments
Democrats and Republicans have said they are committed to modifying or eliminating the reporting requirement, but they have failed to reach a consensus (Los Angeles Times, 9/14). The Senate is expected to hold procedural votes on both the Johanns and Nelson amendments on Tuesday, but neither measure is expected to pass.
Republicans oppose the Nelson amendment because its costs would be covered by setting a new tax on oil companies. The Johanns amendment is expected to draw the support of all Republicans and at least one Democrat, Sen. Blanche Lincoln (Ark.) (Politico, 9/13).
The Obama administration and other Democrats oppose the Johanns amendment because it would eliminate revenue intended to promote wellness and prevention programs (Los Angeles Times, 9/14).
New Public Health Grants Announced, but Future at Risk
Meanwhile on Monday, HHS announced the distribution of nearly $17 million in federal grants to 27 public health training centers through the Prevention and Public Health Fund established under the health reform law, CQ HealthBeat reports. However, the funding is at risk because it would be eliminated by the Johanns amendment.
The preventive care and public health fund includes about $15 billion in mandatory funding over a 10-year period. The fund recently received an extra $750 million from Senate appropriators in fiscal year 2011 to help local communities develop and administer various public health and prevention initiatives.
Rich Hamburg, deputy director of Trust for America's Health, on Monday said that nearly 250 public health groups, unions and other entities have written to senators urging them to vote against the Johanns amendment. Hamburg said he is optimistic that the measure would not have enough votes to pass (Reichard, CQ HealthBeat, 9/13).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.